If you’ve been looking to buy a home and have been biding your time as prices skyrocket, then you’re in luck! The FHFA has just announced that the new conventional loan limits for 2022 will go from $548,250 to $647,200.
That’s an 18% increase in loan limits and a 100% bet that you’ll be able to buy a home without a hassle.
Did you know that you can make a down payment that’s lower than 20%? That said, this all depends on your loan type. Conventional loans offer the lowest down payment possible on a mortgage—3%—but until this past week, many people were worried that they’d have to make a larger down payment in order to afford the house of their dreams.
That’s because home values have steadily increased, and it’s become increasingly common for homes to sell above $500,000. With last year’s loan limits being set to $548,250 for conventional mortgages, that pushed out a lot of people who were ready to buy their first home. Now, with loan limits being pushed up into the 600,000s, that means home buyers now have more options when it comes to getting a mortgage.
The new loan limits will also keep closing costs more affordable. Previously, when homes were going over the conventional loan limit, many homebuyers had to then take on what’s called a jumbo loan. Jumbo loans are just that—mortgages that have values above the conventional loan limit.
Jumbo loans normally require higher credit scores, larger cash reserves, larger down payments, and more expensive closing costs. With the new loan limits issued by the FHFA, homebuyers can breathe easy, knowing that they won’t get squeezed—even in such a hot housing market.
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Higher loan limits are always a good sign. It means that you’ll be able to get your home fully funded, even as housing values increase. And to be fair, increasing loan limits and housing values are a sign that our economy and our housing market are stronger than ever.
This move by the FHFA is going to improve funding for home buyers and make buying faster, easier, and more affordable. If you’re currently looking to buy, then we encourage you to get in touch with one of our loan officers to get better insights as to what kind of loan is the best for you.